Is Biden’s $15 Hourly Wage Increase Worth Losing 1.4 Million Jobs?
The Raise the Wage Act of 2021, a Democrat-led bill introduced last month, was dropped from a Senate bill last week. However, despite President Biden recently stating a wage hike was unlikely, the House Education and Labor Committee included the provision in a first draft release of Biden’s $1.9 Covid-19 relief package. Now, Democrats aim to push the broader bill forward by arguing for reconciliation, a process that bypasses the need for general Republican support.
If passed, every hourly worker in every state from New York to Kansas would earn an hourly $15 per hour wage. So, whether you’re a monopoly such as Amazon, who can easily afford a $15 per hour employee, or the local corner deli owner, each would have to pay employees the same wage.
Bad for little guys?
If Congress raises the federal minimum wage to $15 an hour, one-third of small business owners say they’ll likely lay off workers. Many experts say an “across the board” increase for every state doesn’t make sense. The argument revolves around the fact that each state is different. Mandating the same wage increase for small businesses in states like Utah or Kansas, along with much busier, populous states like New York makes no sense and is not fair.
Suitable for big guys?
Retail giants such as Wal-Mart, Target, Amazon, and others welcome the higher hourly wage proposed by the Biden Administration. Why? One reason is that these “big box” retailers would hardly notice the increase with billions in annual profits. Yet, small businesses’ will. An hourly pay hike such as this will squeeze the “little guy” and small business owners out – reducing competition and driving more customers to the larger stores to even higher levels.
Weighing the pros & cons
Despite cries from small business owners, Democrats have pressed ahead, focusing squarely on the wage increase benefits. Some say the pros don’t outweigh the cons. But we’ll let you be the judge.
Congressional Budget Office (CBO) findings reveal a pay hike would:
- Benefit 27 million Americans.
- Reduce the number of Americans in poverty by 900,000 workers.
On the flip side, the CBO also says the pay hike would:
- Increase the cumulative budget deficit by $54 billion through 2031.
- Eliminate and reduce jobs in the U.S. by 1.4 million.
The final say
Since they hold the House majority, House Speaker Nancy Pelosi expects Democrats to pass this wage increase in their next coronavirus relief package as soon as March – with or without Republican support. If it does give, the bill wouldn’t immediately increase pay to $15 an hour from its current $7.25. According to the latest version of the Raise the Wage Act, the first jump would raise the federal minimum wage to $9.50 an hour, then to $11 next year. It would rise again to $12.50 per hour in 2023, $14 in 2024, and finally settling in at $15 by 2025.
What do you think? Comment below.